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The economy in the UK showed signs of improvement at the beginning of 2021 and may have already recovered from the recession, according to newly released data on Wednesday indicating a small increase in growth during January.
The ONS reported that the Gross Domestic Product (GDP) increased by 0.2% in January after experiencing a 0.1% decrease in December.
During the month, the largest contributor was the services sector, which comprises of hospitality, culture, and leisure and increased by 0.2 percent.
In January, the increase in retail sales contributed to overall growth, as consumers took advantage of post-holiday discounts and increased their spending at supermarkets.
There are signs that the economy may be improving after experiencing a technical recession in the last quarter of the previous year, where output decreased by 0.3%.
The current success in expanding the economy is evident in the recent figures, according to Chancellor Jeremy Hunt. This achievement has led to a decrease of £900 in national insurance contributions for the upcoming year, despite the challenges faced in the past few years.
If we desire to accelerate the increase in rate, we must ensure that working is financially beneficial by eliminating the injustice of double taxation on work.
According to the Office for National Statistics (ONS), the latest data reveals that there was a 0.2% increase in GDP, which is a measure of the country’s economic output, in January. This follows a decrease of 0.1% in December.
Shadow Chancellor Rachel Reeves declared that despite Prime Minister Rishi Sunak’s assertion that his economic strategy is effective, Britain still faces financial difficulties and was further hindered by last year’s recession.
“The economy experienced growth in January, particularly in the areas of retail and wholesaling,” stated Liz McKeown, the director of economics statistics at the Office for National Statistics (ONS). She also noted that the construction sector had a positive performance, driven by successful housebuilding projects after a period of relative stagnation.
The economy experienced a slight decline over the last three months due to decreases in TV and film production, lawyers, and the unpredictable pharmaceutical industry.
Economic experts cautioned that even though data indicates that the UK has probably only undergone a brief and mild economic downturn, the general forecast for the UK economy is bleak and there is little to no growth.
“I do not believe that today holds much significance,” said Alfie Stirling, the JRF’s chief economist in an interview with The Independent. “Minor shifts in decimal points, whether up or down, have minimal impact on the overall path of an economy that is essentially stagnant.”
“The month showed some increase in growth, but overall we are still experiencing a decline for the quarter. This can be attributed to the previous two quarters of negative growth, so there is not much change in that aspect.”
“Secondly, the really important thing is how does it feel for families, what’s the actual economic prospects for the people that live in this country. And whether you measure that by GDP per head which is still down, we haven’t had growth in GDP per head in nearly two years or in terms of lived experience of the economy in terms of real earnings or prices. Things are incredibly weak and there is a lot of economic pain.
I believe that in regard to the two main points, minor fluctuations in overall GDP are relatively insignificant.
GDP per head is the amount of economic output split across the total population and shrank by 0.7 per cent in 2023.
Yael Selfin, the primary economist at KPMG UK, stated: “Forecasts show evidence of continued growth in February, increasing the likelihood of a brief and minor recession in the UK.”
“Despite a slight improvement in economic performance, the overall outlook remains bleak. It is not anticipated that there will be a significant increase in economic growth this year, as demand continues to be affected by the lasting effects of high interest rates. Additionally, weak business and public sector investments will contribute to a slow productivity and hinder long-term growth.”
The minor recession from last year is quickly fading from view as real wages increase and boost household spending, according to Rob Wood, the chief economist for Pantheon Macroeconomics in the UK.
Source: independent.co.uk
